Abstract

Personal managerial indiscretions are separate from a firm’s business activities but provide information about the manager’s integrity. Consequently, they could affect counterparties’ trust in the firm and the firm’s value and operations. We find that companies of accused executives experience significant wealth deterioration, reduced operating margins, and lost business partners. Indiscretions are also associated with an increased probability of unrelated shareholder-initiated lawsuits, DOJ/SEC investigations, and managed earnings. Further, CEOs and boards face labor market consequences, including forced turnover, pay cuts, and lower shareholder votes at re-election. Indiscretions occur more often at poorly governed firms where disciplinary turnover is less likely.

Corporate Governance: Social Responsibility & Social Impact eJournal

Subscribe to this fee journal for more curated articles on this topic

FOLLOWERS

178

PAPERS

4,376

This Journal is curated by:

Lucian A. Bebchuk at Harvard Law School, Marc J Epstein at Rice University - Jesse H. Jones Graduate School of Business, Geoffrey M. Heal at Columbia Business School - Finance and Economics, Donald John Roberts at Stanford Graduate School of Business

SSRN Rankings

About SSRN

We use cookies to help provide and enhance our service and tailor content.By continuing, you agree to the use of cookies. To learn more, visit our Cookies page.
This page was processed by aws-apollo4 in 0.172 seconds